As your staff progress up the competence ladder, so the potential for non-compliance increases. In the second of her assessment benchmarking series Kate Foreman explains the 'at risk' factor

Last week we looked at what might constitute a 'basic level' assessment. Many thanks for your feedback and let me stress that I am not seeking to be prescriptive. Remember that the only real test of incompetence is actually not doing a job to a reasonable standard (for example, not giving adequate advice) so any decisions you might make must ultimately be subjective.

Let us consider the second stage: intermediate standard of knowledge and understanding for any job, task or product.

Ultimately, the circle of competence includes the ability to apply the knowledge and understanding.

Look at the case of football. Some of the greatest coaches in the world know and understand everything about football, but cannot really play it at an advanced level although they may well be able to play a basic game in the park.

So, their coaching competence might need to be measured at an advanced level and their knowledge and understanding is such that they can supervise an advanced player, but there is no point in seeking to assess them at an advanced level of application of the skills.

It is no different to the jobs in the broking industry. We considered in last week's article that everyone in the industry should demonstrate a basic knowledge and understanding relative to their job. But now we must consider how we select those tasks or products that might demand those higher levels of assessment.

Consider a motor insurance department. Ten staff undergo basic assessment on motor insurance and other key areas, such as: regulation, agency, insurance principles, the market, money laundering, data protection, relevant law, firm specific knowledge (procedures, rules, record keeping etc).

Now which of these might we consider for intermediate assessment?

Giving advice
There is a school of thought (to which I subscribe) that anyone dealing with claims without direct (continual) supervision should undertake at least intermediate assessment. That does not mean that basic assessment does not include the need to know about claims, but that those giving advice on claims matters should have a wider knowledge.

Another consideration might be that all those who are allowed to complete and sign cover notes should be expected to have a higher level of knowledge and understanding.

What about those in a supervisory role? Not only should you consider that at the lowest grade of supervisor they should be assessed as supervisors, but also should they have a higher level of competence assessment? Of course, this is not always so. I am at present working with a group of the industry's leading technical specialists and it is most unlikely that their supervisor will have a greater knowledge and understanding of their subject than they themselves.

However, in most cases the average broker will appoint a supervisor, not only for supervision skills but also because they are more experienced than those they supervise.

In most cases in the private motor market, we are dealing with 'book rates' from a computer generated quotation, but what about those cases that have to be referred to the underwriter? From the risk management perspective, you might consider it a wise procedure to ensure that all such cases are checked by someone who has been assessed at intermediate level.

Consider a basic motor insurance knowledge question. How would you explain the term 'comprehensive' to a client wanting motor insurance?

Now consider an intermediate level question. A customer phones and tells you that he has received a letter claiming £2,000 for repair to damage to a third party vehicle two months ago. He did not report the case because he thought that the damage was no more than a scratch and the other driver said that he would take no action. What do you do? Can you see how the complexity has risen.

So, in this department of ten people the assessment programme might look like this:

Basic assessments: All staff

Intermediate assessments: Claims handler, two people with authority to grant cover, department supervisor.

In addition, you may feel that the claims handlers should know more about claims and the supervisor more about the supervisory aspects of regulation.

Ultimately, it is in the job specifications that you will define not only the knowledge and understanding levels that you want as a minimum for the job, but also the standard you expect someone to reach within the level.

For example, if the assessment is a multiple choice test, do you want a pass mark? This has some advantages (it is easy to measure) but what happens if someone does not know or understand something critical (see last week's article).

A radical idea that RWA has been developing is the 'At Risk' mark which can be identified at any level and which can related to all three components of competence - knowledge, understanding and application.

What you should consider doing is looking at each job and identifying where a gap in that person's knowledge and understanding will put the customer or the firm at risk. If the gap is not filled, then there could be a weakness in competence.

If, for example, an adviser forgets to make a proper note of instructions to hold cover (either by hand or electronically) is the customer or the firm 'at risk'? The immediate answer is in the affirmative, and so it would be quite proper to include the need to do this in the job description (for example, the person doing this job will be expected to make a sufficiently detailed note of conversations and meetings with customers that can be understood by a third party). And someone failing to do this creates a competence gap.

Generic matter
Equally, if a supervisor fails to notice that an adviser is not making sufficient notes, the gap widens and of course the firm becomes non-compliant.

On the other hand, there may be something that someone is expected to know which may not create the 'At Risk' status, and in that case you may feel more relaxed about the way such a gap is addressed.

Part of an assessment may relate to knowledge and understanding of the history of the industry or some generic matter that you feel needs to be known, but where a gap in knowledge does not create risk.

Remember in the meantime that as practitioners step through the levels of competence, they should embrace the idea that the concept of maintenance of knowledge and understanding does dictate that they have to revisit the lower levels throughout their careers.

Reports from the expert witness side of RWA do indicate that there is a good incidence of professional indemnity claims that arise when the more experienced practitioners forget some of the basic principles.

  • Kate Foreman is a compliance and training specialist at RW Associates
  • Next week

  • In the final part of this look at deciding levels of assessment of knowledge and understanding we will look at the advanced level (for specialists and the most experienced) and consider some of the particular problems that arise at this level
  • This page is edited by RW Associates, specialists in training, compliance and competence. Email,
    ruy.lopez@broker-compliance.co.uk

    To download a PDF of this article as it appears in the magazine click here .